To What Extent Does the Interest Burden Affect Firm Survival? Evidence from a Panel of UK Firms during the Recent Financial Crisis

Using a panel of mainly unquoted UK firms over the period 2000–09, we document a significant effect of changes in the interest burden from debt‐servicing on firm survival. The effect is found to be stronger during the recent financial crisis compared with more tranquil periods. Furthermore, the survival chances of bank‐dependent, younger, and non‐exporting firms are most affected by changes in the interest burden, especially during the crisis. Our results are robust to using different estimation methods and different interest burden measures They suggest that one way for policymakers to mitigate the effects of financial crises by limiting firm failures would be to prevent financing costs from rising, especially for those firms more likely to face liquidity constraints.     

Characterization of the extreme core allocations of the assignment game

A characterization of the extreme core allocations of the assignment game is given in terms of the reduced marginal worth vectors. For each ordering in the player set, a payoff vector is defined where each player receives his or her marginal contribution to a certain reduced game played by his or her predecessors. This set of reduced marginal worth vectors, which for convex games coincide with the usual marginal worth vectors, is proved to be the set of extreme points of the core of the assignment game. Therefore, although assignment games are hardly ever convex, the same characterization of extreme core allocations is valid for convex games.     

Real-world cost of treatment for multiple sclerosis patients initiating and receiving infused disease-modifying therapies per recommended label in the United States

Abstract

Aims: The study evaluated the real-world cost of treatment in multiple sclerosis (MS) patients initiating infused disease-modifying-therapies (DMT) in the United States.

Materials and Methods: This retrospective cohort study using administrative claims data included adult patients with MS initiating index infusion DMT (ocrelizumab (OCR), natalizumab (NTZ) or alemtuzumab (ATZ)) from April 2017–September 2018 with 6-months pre/12-months post-index continuous enrollment. The primary cohort included patients who had prescribed annual dosing visits indicated by the approved product label (PL): 3 OCR, 5 ATZ, and 12–13 NTZ infusion visits within the first year of initiation. Annual treatment cost was the sum of all costs on index DMT infusion visit dates. Costs were summarized for a primary and secondary cohort of patients receiving additional doses than prescribed in PL (>3 OCR, >5 ATZ, and >13 NTZ infusion visits); and an overall cohort of patients who met minimum required annual dose (≥3 OCR, ≥5 ATZ, and ≥12 NTZ), further stratified by insurance type.

Results: For patients in the primary cohort (123 OCR, 18 ATZ, and 48 NTZ), mean (standard-deviation) annual cost of treatment with OCR, ATZ, and NTZ cohorts was $72,066 ($34,480), $121,053 ($51,097) and $93,777 ($38,815), respectively. Among patients initiating OCR and NTZ, 15 and 6% respectively, had additional infusion visits leading to greater costs. Mean annual costs of index infusion DMT treatment in the overall cohort (162 patients treated with OCR, 18 with ATZ, 56 with NTZ) were $80,582, $121,053, and $93,807, respectively. The mean costs for commercial enrollees were higher than those for MAPD enrollees.

Limitations: Small sample size, limited population generalizability, and cost-reduction for ATZ beyond the second year need to be accounted for.

Conclusions: Real-world infusion DMT treatment costs for commercially insured patients were higher than perceived expenditures based on wholesale acquisition cost and administration costs via a physician-fee schedule. Consideration of real-world costs in cost-effectiveness and treatment/coverage decisions is needed.     

Pension funds with a minimum guarantee: a stochastic control approach

In this paper we propose and study a continuous-time stochastic model of optimal allocation for a defined contribution pension fund with a minimum guarantee. We adopt the point of view of a fund manager maximizing the expected utility from the fund wealth over an infinite horizon. In our model the dynamics of wealth takes directly into account the flows of contributions and benefits, and the level of wealth is constrained to stay above a “solvency level.” The fund manager can invest in a riskless asset and in a risky asset, but borrowing and short selling are prohibited. We concentrate the analysis on the effect of the solvency constraint, analyzing in particular what happens when the fund wealth reaches the allowed minimum value represented by the solvency level.     

The Performance of the European Market for Corporate Control: Evidence from the Fifth Takeover Wave

This paper presents an in‐depth analysis of the performance of large, medium‐sized, and small corporate takeovers involving Continental European and UK firms during the fifth takeover wave. We find that takeovers are expected to create takeover synergies as their announcements trigger statistically significant abnormal returns of 9.13% for the target and of 0.53% for bidding firms. The characteristics of the target and bidding firms and of the bid itself are able to explain a significant part of these returns: (i) deal hostility increases the target's but decreases bidder's returns; (ii) the private status of the target is associated with higher bidder's returns; and (iii) an equity payment leads to a decrease in both bidder's and target's returns. The takeover wealth effect is however not limited to the bid announcement day but is also visible prior and subsequent to the bid. The analysis of pre‐announcement returns reveals that hostile takeovers are largely anticipated and associated with a significant increase in the bidder's and target's share prices. Bidders that accumulate a toehold stake in the target experience higher post‐announcement returns. A comparison of the UK and Continental European M&A markets reveals that: (i) the takeover returns of UK targets substantially exceed those of Continental European firms. (ii) The presence of a large shareholder in the bidding firm has a significantly positive effect on takeover returns in the UK and a negative one in Continental Europe. (iii) Weak investor protection and low disclosure in Continental Europe allow bidding firms to adopt takeover strategies enabling them to act opportunistically towards the target's incumbent shareholders.     

Stochastic perspective of industrial distribution network processes

This article investigates contemporary distribution processes in the industrial market. The main trend in distribution during the recent decades manifests itself in a growing number of network-type distribution chains. Based on the evolutionary trends in distribution research, we came up with the idea to investigate distribution networks processes using mathematical tools of probability theory. We consider a distribution network in a stochastic way, where a focal agent optimizes the distribution chain at each decision-making node by switching between possible partners. This allows us to apply time-homogeneous Markov chains theory to explore the partner selection process. We present an approach that allows for the estimating of implicit non-price variables of partner choice in a supply chain. The approach is based on the research context of the transitional Russian economy.     

Facing the “Right” Side? The Effect of Product Facing Direction

Product image display in advertising plays an important role in consumer perception and behavior. In this research, we establish important downstream consequences of one significant aspect of product image display—facing direction—on product evaluations. Building on the literature of visuospatial attention and grounded cognition, we show that products with their images facing toward the left (versus right) in advertising are evaluated more favorably when consumers’ temporal focus is on the past, whereas the reverse holds true when consumers focus on the future. Furthermore, we establish that the impact of facing direction on product evaluations exists regardless of the horizontal position of product images. In addition, we demonstrate that for products higher on desirability features, a mismatch (versus match) between facing direction and consumers’ temporal focus leads to higher product evaluations, whereas the reverse holds true for products higher on feasibility features. Important implications for advertising theory and practice are discussed.     

Existence of financial equilibria with endogenous short selling restrictions and real assets

We consider a model with real assets and restricted participation described by household-specific price-dependent short selling constraints. We show existence of equilibria for all elements in an explicitly characterized large subset of the set of economies.     

Engaging in duty of care: towards a terrorism preparedness plan

Abstract

A minor digression, if you will: it has been over 30 years since I (referring to lead author) first wrote on the topic of terrorism and its potential impact on conducting business in a global context. The most vivid memory I have relative to that initial foray into this new topic was making a presentation at the annual summer American Marketing Association (AMA) conference in Chicago. I got halfway through the paper and I started to hear jeering noises emanating from the audience. As I remember (it is not a pleasant memory), the audience thought that I had lost my mind and that the reviewers of the paper allowed this rubbish into the AMA meeting (the implication was that they must have been drinking at the time). This is a true account of the presentation and when I left the session, I would be dishonest if I didn’t tell you that I had made a terrible error and there would be significant ramifications to my young academic career. Yet, no country is untouched by global terrorism today, and the ramifications for global organizations are escalating year by year.